Comptroller Review Should Resume for COVID Contracts, Scott Stringer Urges Mayor

Additional reporting by Yoav Gonen

Comptroller Scott Stringer urged Mayor Bill de Blasio on Tuesday to reinstate “checks and balances” on city contracting, citing a dwindling demand for COVID-related gear and a lack of oversight that enabled unproven sellers — even one with a criminal background — to score lucrative deals.  

The mayor signed an emergency executive order on March 16 suspending normal procurement rules to make it easier for the city to buy goods and services at the height of the pandemic. 

As of August 20, the city has spent more than $1.5 billion in contracts that bypassed the scrutiny of the comptroller’s office, Stringer wrote in a letter to de Blasio, which asks the mayor to “swiftly rescind” the executive order and share with the comptroller’s office files for all contracts issued under it.

“With billions of dollars at stake amid an economic crisis that has hit vulnerable New Yorkers the hardest, every penny counts,” Stringer said in a statement. “We need to restore checks and balances, scrutinize and ask tough questions, and provide the transparency and accountability New Yorkers deserve from their government.” 

The comptroller’s demand comes after a series of reports by THE CITY and other news outlets highlighted the city’s frantic efforts to secure emergency contracts for ventilators, masks and other COVID-related gear from a variety of vendors at the pandemic’s peak. 

Among those that did not ultimately deliver goods the city signed for was the firm Digital Gadgets LLC, a consumer electronics dealer run by a donor to de Blasio’s mayoral and presidential campaigns, Charlie Tebele. A $91 million March 30 emergency contract with the first-time city vendor for ventilators and other breathing gear, signed by the city’s purchasing agency, resulted in a $9.1 million payment to the company soon after its signing. 

In mid-May, the Department of Citywide Administrative Services canceled the contract “because it decided to order a different ventilator model,” an agency spokesperson told THE CITY at the time.

Asked about Stringer’s demand on Tuesday, de Blasio stressed a need to be nimble. “I haven’t seen the specifics of what the comptroller put forward but would say the obvious: this crisis isn’t over,” adding: “we need all of the tools and all the flexibility we can.”

Defending a Donor

Digital Gadgets has received more than $25 million in city payments in all. Under other contracts, it ended up supplying nearly 1.9 million N95 masks at $4 each, along with 6 million KN95 masks and more than 2.2 million surgical-style masks.

A week before the city and Tebele signed the first of the contracts, de Blasio appointed Tebele to the board of the New York City Economic Development Corporation, THE CITY reported last week.

On Monday, the mayor defended signing deals with Tebele — whose family contributed nearly $45,000 to de Blasio’s reelection, presidential and political action funds.

“Yeah, known him for years, prominent community leader,” de Blasio said at his daily coronavirus briefing. “He’s done really good work in the community and I have a lot of respect for him and he’s also a successful business person. In terms of the emergency supplies we wanted everyone who could help us get involved.”

He added: “I do know that everyone who came forward and said they could help get us PPE were put into the same exact process because we needed the help desperately. You will remember that we were at a point where we were just down to a few days supply and we needed everyone to help who could help.”

In a statement to the New York Post following THE CITY’s coverage, Tebele attorney Harlan Lazarus said: “As a lifelong native New Yorker, Mr. Tebele cares deeply about the future of our City in these difficult times. With that in mind, Mr. Tebele has provided the City with access to a worldwide supply chain, providing the most difficult to get products to the city, at a critical time.”

Regarding Tebele’s mayoral appointments to the EDC board and a recovery advisory group, Lazarus said: “he has given his time and energy to the City by serving on Boards concerning important New York City initiatives.”

Canceled Contracts

Stringer alluded to aborted deals in his letter to the mayor, requesting that the mayor’s office provide him with a list of them as well as efforts to recover payments from companies that failed to deliver. 

“It has been reported that a number of COVID-19 related contracts worth tens of millions of dollars have been canceled or not fulfilled,” he wrote. “These same reports also indicate that many of these contracts were with vendors that lack the necessary capacity or relevant experience, or even have criminal backgrounds. Given these facts, it is imperative that my office resume its Charter-mandated role of safeguarding taxpayer funds.”

The Wall Street Journal reported in May that the chief executive of a Connecticut firm that signed a contract with the Department of Sanitation to deliver emergency meals had earlier in the year pleaded guilty to attempting to interfere with an Internal Revenue Service audit of his company — a felony the department had failed to spot in his record. 

THE CITY found that Tebele at the time he signed some $119 million in Digital Gadgets COVID contracts with the city had a lien from the IRS for more than $568,000 on his Upper East Side townhouse — an issue that would normally be reviewed as part of a vendor “responsibility determination,” according to the comptroller’s guide to the procurement process. He has since repaid that debt.

Said Stringer in a statement to THE CITY: “Reporting on contracts awarded to Digital Gadgets raises questions and underscores the need for my office to resume its Charter-mandated role of procurement oversight.”